India must focus on data mining: Shome

SummaryIndia should strengthen the Large Tax Payers Unit and focus on data mining and analysis of tax administration, expert Parthasarathi Shome said today.

India should strengthen the Large Tax Payers Unit (LTUs) and focus on data mining and analysis of tax administration, expert Parthasarathi Shome said today.

"There is need to strengthen LTUs and focus on data mining and analysis of tax administration," Shome who is also a professor at the Delhi based-think tank Indian Council for Research on International Economic Relations (ICRIER) said.

LTUs are self-contained tax administration offices under the Department of Revenue acting as a single window clearance point for all matters relating to central excise, income tax/corporate tax and service tax.

Entities would be able to file their excise return, direct taxes returns and service tax return at such LTUs and for all practical purposes will be assessed to all these taxes at these LTUs.

Shome, who is the head of the panel on GAAR set up by Prime Minister, was addressing the delegates at a seminar organised jointly by FICCI and International Chamber of Commerce (ICC) here.

Finance Minister P Chidambaram had earlier proposed setting up LTUs in Budget 2005-06, with a view to reduce the tax compliance costs and delays for the LTUs.

Currently, LTUs function in Bangalore, Chennai, Mumbai and Delhi, but the scheme has not been successful as not many taxpayers volunteer for fear of closer scrutiny.

The scheme entailed opening up of a single window facilitation centre for all large entities paying excise duty, corporate tax/income tax and service tax.

It was supposed to cover those units who paid excise duty or service tax of Rs 5 crore or more or a corporation tax of Rs 10 crore or plus.

Recently, Chidambaram had asked officers to focus on low taxpaying sectors to add an additional Rs 30,000 crore to the revenue kitty.

The minister had said though the applicable tax rate for corporations was 30 per cent, the effective tax rate was just 24 per cent and even lower in some sectors.

He had further said instead of randomly going after taxpayers, most of whom duly paid taxes, the revenue department should focus on those below-average sectors to see whether the average could be raised for greater collection.